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Intel’s Kowtowing To China Shows Biden Needs A Tougher Stance

Intel China
Image CreditKlaith Zhang/Flickr
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Intel joined a long line of American companies last week by apologizing to China after its letter to suppliers drew backlash from Chinese state media and nationalist Chinese netizens. 

Intel recently sent a letter to suppliers advising them not to source from Xinjiang, a region where the Chinese Communist Party (CCP) has committed genocide against Uyghur Muslims and other minorities, including mass incarceration and turning detainees into forced labor.

Intel didn’t mention genocide in its letter. Instead, it only stated that “multiple governments have imposed restrictions on products sourced from the Xinjiang region. Therefore, Intel is required to ensure our supply chain does not use any labor or source goods or services from the Xinjiang region.”

Intel sent its letter a few days before President Biden signed the Uyghur Forced Labor Prevention Act into law, which bans imports from the Xinjiang region due to forced labor concerns. The legislation recently passed the U.S. Congress with overwhelming bipartisan support. Intel probably saw the writing on the wall and decided to warn its business partners in advance. 

The Chinese government is not happy about the Uyghur Forced Labor Prevention Act. China’s Ministry of Foreign Affairs said Beijing opposed the act with “strong indignation and resolute opposition” and called the claims of “forced labor” and “genocide” in Xinjiang “vicious lies hyped up by anti-China forces.”

After Intel’s letter to suppliers was made public, the Chinese state media fanned condemnations against the company on Chinese social media. Intel quickly folded and posted a statement, saying, “We deeply apologize for the confusion caused to our respected Chinese customers, partners, and the public.” Intel also noted that its letter to suppliers was “only to comply with U.S. law and didn’t represent Intel’s stance on Xinjiang.”

Buying Silence On Genocide

U.S. lawmakers and consumers should demand Intel clarify the company’s stance on Xinjiang. Since 2017, numerous reports, leaked documents from the CCP, and witness testimonies have provided indisputable evidence of the CCP’s human rights abuses in Xinjiang.

Former U.S. Secretary of State Mike Pompeo designated the CCP’s actions against Uyghur Muslims and minorities in Xinjiang as “genocide” and a “crime against humanity.” Current U.S. Secretary of State Anthony Blinken said in his Senate confirmation hearing that he agreed with his predecessor’s designation. 

Most recently, the Uyghur Tribunal, an independent U.K.-based panel of lawyers, academics, and activists, affirmed that the CCP’s policies in Xinjiang, including forced birth control sterilizations, amount to genocide.

As one of the world’s largest multinational corporations, Intel cannot profess ignorance of all this evidence. The company likely refuses to take a stand on the issue for two reasons. First, China is Intel’s largest market by revenue as of 2020. Intel’s latest annual report said it earned $20 billion from China, an amount that clearly is more than enough to buy Intel’s silence on the CCP’s human rights abuses. 

Second, Intel is also morally complicit because it has more than 80 percent market share in China. The company’s chip products reportedly have helped power the CCP’s mass digital surveillance system in China, especially in Xinjiang. Therefore, the company cannot call out the CCP’s human rights violations in Xinjiang without exposing its detestable involvement.

Intel argues that its silence on China’s human rights violations and its kowtowing to Beijing’s demands is necessary to follow Chinese law, an excuse many U.S. companies, including Apple and Nike, used in the past to justify moral cowardice.

State-Run Chinese Telecom Company Defies FCC

In contrast to U.S. companies’ collective compliance with Chinese laws, China Telecom, a Chinese state-run company, vowed to continue its U.S. operations despite an eviction order from the Federal Communications Commission (FCC).

In October 2021, the FCC revoked the ability of China Telecom Americas to operate in the U.S. due to national security concerns. The FCC’s press release says that as a state-owned enterprise, China Telecom “is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight.” Therefore, the FCC ordered China Telecom Americas to “discontinue any domestic or international services” within 60 days following the release of the order.  

According to Bloomberg, China Telecom defiantly rejected the FCC’s order and insisted it would continue operating in the United States after January 3, 2022. While American companies such as Intel are driven by commercial interests to comply with Chinese laws, China Telecom’s action has nothing to do with protecting its commercial interests in the United States. 

As a state-own enterprise, China Telecom answers to the CCP only. Its noncooperation with U.S. law was no doubt instructed by the CCP to test the Biden administration’s resolve. The administration’s mixed signals on its China policies and its disastrous withdrawal from Afghanistan have made the administration look weak. Adversaries such as China and Russia are emboldened to push back against the United States in ways they have never had before, including openly defying U.S. law.

Biden Administration Needs to Act

The Biden administration has its work cut out to deal with non-compliant Chinese companies in the United States and overly compliant American companies in China. 

For non-compliant China Telecom, some experts suggested the White House could step in and impose sanctions on the company, which would make the company’s life so miserable that it would have no choice but to shut down its U.S. operation. The White House needs to act soon to signal to Beijing that it is unwise to challenge U.S. law. 

For overly compliant American companies in China, the Biden administration has more work to do. It’s obvious that when left to fend for themselves, big or small, American companies have no desire to stand up to China at the risk of losing profits and market share. The Biden administration needs to take a stick and carrot approach.

The Uyghur Forced Labor Act is a kind of “stick” the administration can use to hold American companies accountable for their actions. Another stick the administration should use is to restrict Wall Street firms from funneling billions of U.S. taxpayers’ money into Chinese companies that are suppliers to the Chinese military and are helping the CCP advance its ability to challenge the United States militarily in areas such as space and artificial intelligence.

US Needs Its Own Supply of Rare Earth Minerals

But besides the stick, the Biden administration also needs to offer American companies carrots. For instance, the administration should help expand export markets for U.S. goods and services outside of China by lowering trade barriers with friendly nations, so that when an American company loses profits and market share in China, it can recoup them somewhere else.

The Biden administration should also loosen regulations so that natural resources can be developed in the United States and American companies don’t have to rely on China. For example, China dominates in extracting and producing rare earth minerals, 17 elements that play a crucial role in today’s digital economy, from electric vehicles to missiles. China often uses its dominance to coerce other nations to bend to its will. 

The United States has plenty of rare earth minerals deposits and used to lead the world in such mineral production, but transferred extraction and production technology to China in the 1980s and largely exited the minerals supply chain.

The Biden administration recognizes the need to rebuild the rare earth mineral supply chain in the United States. But its strict environmental policies are slowing the administration’s effort because no business wants to invest in a project knowing it will be bogged down by years of environmental reviews. The Biden administration must remove the regulatory barriers to see American companies become free from China’s coercion on rare earth supply.

The CCP is challenging the United States everywhere, including our backyard. The Biden administration cannot afford to respond meekly or not take any action at all.